Disclaimer & Disclosures This report must be read with the disclosures and the analyst certifications in the Disclosure appendix, and with the Disclaimer, which forms part of it. Issuer of report: The Hongkong and Shanghai Banking Corporation Limited View HSBC Global Research at: https://www.research.hsbc.com MiFIDII–ResearchIsyouraccessagreed?CONTACT us today Resilient growth and low inflation are likely to persist for now, but data volatility has picked up, especially headline inflation...  ...but this was mostly driven by an ephemeral jump in oil prices, and core inflation remains extremely well anchored  ...coupled with increased policy uncertainty in the West, Asian central banks are likely to remain in 'wait and see' mode for now We had a chill summer in Asia. Volatility collapsed and the data highlighted an enviable mix of strong growth and decelerating inflation. This trend will remain in place for now (see: Asia Economics Quarterly), but fresh autumnal winds have augured some change. As is usually the case with Asian markets, the strongest winds blow from the West. Indeed, US policy - both monetary and fiscal - will continue setting the tone for financial markets for the rest of the year, as they have in recent weeks when currency market volatility jumped on the back of tax reform news. Fortunately, HSBC's FX strategists believe that the weak dollar trend will ultimately persist - a boon for liquidity in the region - in line with our belief that the FOMC will be a lot less hawkish than the "dots" currently suggest. This is particularly the case when it comes to fed funds hikes for next year, not to mention that the ECB and BoJ are likely years away from outright tightening. Coupled with what is likely an ephemeral jump in financial volatility, there is increasing noise in the data, too. Most noticeably, there was a jump in headline CPI in some economies in August and September - most notably in Thailand and Malaysia - almost entirely attributable to higher oil prices. Take Malaysia: headline CPI jumped 0.5ppt to 3.7% y-o-y, while core decelerated to a 7-month low of 2.4%. Crude prices are already retreating, while food price baskets point to disinflation despite noticeable exceptions. In the case of Korea, lower food prices more than offset higher oil prices in September. 3Q GDP prints will trickle in over the coming weeks. Export-dependent economies will likely see robust performance thanks to electronics. While activity should remain strong in 4Q, PMIs mostly flat-lined in September, suggesting momentum will slow into 2018. And China? The market will focus on the 19 October data dump: 3Q GDP may decelerate a tad due to softer property investment and a slight deceleration in exports, but should also reflect an encouraging rebound in private investment. However, China watchers will be focusing more closely on any pronouncements or hints during the 19th Party Congress starting on 18 October, for a more forward-looking perspective. What does this all mean for Asia? Policymakers' conviction that inflation will remain low provides room to 'wait and see', and in some cases has allowed easing. Bank Indonesia surprised with a second consecutive rate cut in September, and the PBoC announced a differentiated RRR cut to spur SME lending. Central banks rumoured to be prime candidates for tightening, namely BNM and BSP, are likely to keep rates on hold. But not all are in the same boat. We expect the MAS to verbally set the stage for an April slope increasing in the October 13th statement - with a risk of outright tightening next week. All in all, clear skies for Asia. But look out for pockets of turbulence. 12 October 2017 Frederic Neumann Economist The Hongkong and Shanghai Banking Corporation Limited fredericneumann@hsbc.com.hk +852 2822 4556 Joseph Incalcaterra Economist The Hongkong and Shanghai Banking Corporation Limited joseph.f.incalcaterra@hsbc.com.hk +852 2822 4687 Ji Won Kwon Economist The Hongkong and Shanghai Banking Corporation Limited ji.won.kwon@hsbc.com.hk +852 2996 6621 Dhiraj Nim Associate Bangalore On top of the data ECONOMICS ASIA Up, down, same same  ECONOMICS ● ASIA 12 October 2017 2 Rolling over? 3 Best of Asian economics research 6 PMI Heatmaps 8 Indicators 10 GDP & Industrial Production 12 Export 13 Consumer Spending 14 Headline & Core CPI 15 Major Asia Events 17 Australia 18 China 19 Hong Kong 20 India 21 Indonesia 22 Japan 23 Korea 24 Malaysia 25 New Zealand 26 Philippines 27 Singapore 28 Sri Lanka 29 Taiwan 30 Thailand 31 Vietnam 32 Disclosure appendix 33 Disclaimer 35 Contents  3 ECONOMICS ● ASIA 12 October 2017 Good, but not stellar Exports have been one of the big surprises over the past year in Asia. And punchy headline numbers continue to roll in: Korean shipments rose over 30% y-o-y last month! Australia is on a roll as well, even recording trade surpluses, a rare occurrence in recent years. Taiwan has been riding the wave of the wor